Shop Direct (Greater Manchester)

Debbie Abrahams Excerpts

Tuesday 1st May 2018 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Thank you for calling me to speak, Mr Deputy Speaker. It is always a pleasure to see you in the Chair.

I am pleased to have been able to secure this very important debate on a matter that affects so many of my constituents and their families. Working at Shop Direct has been, for many families, a generational thing in that fathers, mothers, sons and daughters are employed across its sites. I am delighted to have here my hon. Friends the Members for Oldham West and Royton (Jim McMahon), for Worsley and Eccles South (Barbara Keeley) and for Heywood and Middleton (Liz McInnes), whose constituents have also been affected by the announcement of the closure of Shop Direct in Manchester.

By way of background, Mr Deputy Speaker—because I can see you are waiting with bated breath to find out more about what has happened—on 11 April, Shop Direct announced its decision to pull out of all its Greater Manchester sites, including Shaw in my constituency, with a total loss of almost 2,000 jobs. The Shop Direct distribution centre in Shaw currently employs 750 Shop Direct employees, with 636 agency employees. In total, the move affects 1,177 permanent staff and 815 agency workers. This has been devastating news for the Shop Direct staff and their families. Although the closure will not take place until 2020, the anticipated redundancies will have a dreadful effect on local communities, including, as I say, Shaw in my constituency.

[Liz McInnes (Heywood and Middleton) (Lab)]

I wonder if my hon. Friend is aware of the ironic fact that on 23 March, just three weeks before it announced the closures, Shop Direct was crowned best employer at the Retail Week awards 2018 for its

“coordinated programme of pioneering initiatives designed to empower colleagues, support new talent and offer opportunities to young people.”

This is a sad indictment of Shop Direct.

[Debbie Abrahams]

Absolutely. The irony is not lost on me, and I will come on to that.

What was so disappointing was the failure of Shop Direct to engage with anyone. As Shop Direct directors revealed on the morning of this announcement, this move has been planned for more than 18 months, and during that time there have been no discussions with staff, USDAW, Oldham Council, my colleagues and me or the Greater Manchester Mayor, Andy Burnham.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing this issue to the House for consideration. Does she agree that it is time the Government began to intervene to encourage big businesses to remain in situ, especially considering that profits appear in this case to be 14.6% on the back of 15.9% growth in 2016 and 17.4% growth in 2015? Businesses must understand that they have a duty of care to employees, which does not appear to have been met in this case. It is not all about making profit; it is about looking after the employees.

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[Debbie Abrahams]

Absolutely; I could not agree more.

Shop Direct was created from the merger of the mail order and retail companies Littlewoods and Great Universal Stores, and the sites affected in Shaw, Little Hulton and Raven are the last remaining fulfilment sites in the north-west region. The company has been providing employment for families in Greater Manchester for many decades, and these sites have different generations of the same families working there. The impact of closures will be huge on hundreds of families, as well as local businesses and local communities.

This decision should in no way be seen as a reflection on the workforce’s capability or dedication. The professionalism and commitment of Shop Direct employees has been second to none. After years of dedication and commitment, many workers have been left reeling by this decision. I have received correspondence, including from one constituent who has worked for the company for more than 20 years, who said:

“I am aghast at how the workforce has been treated.”

I also understand that because of shift patterns, some staff received word of the closure by text message—just imagine how they felt.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

I congratulate my hon. Friend on securing this important debate and on the sterling work she has done to co-ordinate our collective response to this issue. Many people have worked for Shop Direct over many generations, right from the early days of Littlewoods, some with 30 or 40 years of service. What really hurts people and offends me is just how little consideration Shop Direct has given to that loyalty. When the decision was made to relocate to the east midlands, it did not care a jot about the people who had given their lives to build up that company and make it profitable. They were cast aside. Does she agree that that is not the face of good business practice?

[Debbie Abrahams]

Absolutely; my hon. Friend has hit the nail on the head. This is a thriving business, and the callous disregard with which the workers have been treated is absolutely shameful. My hon. Friend the Member for Heywood and Middleton pointed to the fact that this business was named employer of the year. How can it be?

The decision is especially worrying because Shop Direct is not in financial trouble. It reported an increase in underlying profits before tax of 10.2% to £160.4 million last year. It has seen sales growth increasing over five consecutive years. The decisions it has made are purely commercial. The proposed site in the east midlands will employ fewer staff as Shop Direct moves towards increased automation. Given that automation is likely to offer commercial opportunities but also huge challenges for the UK labour market as a whole, the experience of Shop Direct workers has a wider impact on the UK labour market as a whole.

I am grateful to the Business Secretary for meeting me earlier today, but I will be seeking urgent action from the Minister in recognition of the support needed by Shop Direct workers in Oldham and Little Hulton and by workers across the country whose jobs may also be under threat as a result of automation.

Since the announcement, I have met the leader of Oldham Council and the USDAW union representatives for Shop Direct, alongside my hon. Friend the Member for Oldham West and Royton. I have also spoken to and subsequently met Shop Direct directors at a meeting convened by Greater Manchester Mayor Andy Burnham, together with my hon. Friend the Member for Worsley and Eccles South, council leaders, the Salford Mayor, Department for Work and Pensions and Department for Business, Energy and Industrial Strategy representatives and USDAW representatives, where we tried to seek a way forward.

It was essential to bring together around the table all the parties affected by Shop Direct’s proposed relocation to the east midlands so that it could hear directly from us our huge concerns about the move. At the meeting, Oldham Council tabled alternative proposals for a site of a similar size, accompanied by a favourable business package, at Broadgreen Park, Chadderton. Very disappointingly, however, this was rejected, and there was no willingness from Shop Direct to engage on alternative proposals in Greater Manchester.

Given that the Shop Direct executives appeared to have made their decision, my colleagues and I then pushed them to describe what specific training and support they would provide for the workforce over the next two years—including their communications strategy, given the poor communication to date—while in particular looking at options for the Raven Mill site as a specialist returns centre.

The Mayor put forward a proposal at the meeting to establish a taskforce, led by Greater Manchester’s Growth Company, which was agreed by all parties, including both Shop Direct and the Department for Work and Pensions. I understand that the first officers meeting of the taskforce was held yesterday, and I am awaiting feedback from it.

Working closely with USDAW, we will be holding the company to their legal obligations to engage in a meaningful consultation. The consultation started formally today, and the union has clearly stated that its test of whether it is meaningful is that Shop Direct should fully explore any options for relocating to a nearby site, as staff, through their trade union, are entitled to a say in the future of the business. The company has said in a statement that it will

“be partnering with local and national organisations to provide our colleagues with tailored advice and training, including career skills, access to financial planning and vocational courses to support re-training. It’s also our plan to offer apprenticeships in in-demand skills across our existing operational sites.”

I am grateful for the response to my letter to the Prime Minister which I received last night not from this Business Minister but from another one—the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Watford (Richard Harrington)—but it only goes so far. What specific discussions has the Minister had with colleagues in the DWP and elsewhere on support, quality training and reskilling for the Shop Direct Greater Manchester workforce over the next two years?

[Barbara Keeley (Worsley and Eccles South) (Lab)]

I want to ask my hon. Friend about the Little Hulton employees. Unemployment in Little Hulton is double the national average. As she has already said, no consideration has been shown for the loyalty of the staff there, many of whom have worked for the firm for decades. When we had the meeting with our friend the Greater Manchester Mayor, Andy Burnham, there was a clear expectation that staff would remain in place for two years—across two Christmas seasons—and not take their redundancy until the end of that period. In a difficult place for unemployment, employment chances may come up during that period, and I really think that redundancy packages should be offered to staff earlier. Does she agree?

[Debbie Abrahams]

My hon. Friend makes a very valid point, and this needs to be explored. Again, I was struck by the lack of awareness among the directors we met about that situation, which really needs to be given considerably more thought.

I would be grateful to the Minister for an assurance that focused plans will be developed regarding skills and retraining packages, employment advice and financial support. Locally, it is vital for all parties, including the Government, to partner with Get Oldham Working, which provides holistic support to Oldham residents to access employment and training opportunities, as well as to work with local employers to understand the workforce and skills requirements better. Will the Minister commit to his Department working with the council on workforce support and employment opportunities for current Shop Direct employees, and will BEIS representatives be actively involved in the taskforce that has been set up for this purpose? What discussions has he had about supporting Oldham Council and Shop Direct to bring new employment to the Shaw and Chadderton sites, and about ensuring that the future of all Greater Manchester sites are secured?

Turning to the wider implications of automation, the move to increased automation is given as a key driver behind Shop Direct’s proposals to move to the east midlands. The Minister will be aware that the Bank of England estimates that 15 million UK jobs will be affected by automation by the 2030s, with PricewaterhouseCoopers saying that a third of all UK jobs will be affected. There is already evidence of this in the retail sector and although automation will affect jobs at all levels, it will hit low-paid jobs first. The potential effect on already widening inequalities is a real risk, and the estimates do not even factor in the impact of Brexit on the economy and jobs.

We therefore need to know what measures the Government have put in place to support workers affected by the ascendance of automation. What are the Government doing to assess the impact on the labour market as a whole, and on socioeconomic inequalities? The Minister’s letter mentions the Matthew Taylor report and his positive outlook on innovation, but while we must embrace change we must also manage it, recognising that at each stage both positive and negative effects will be associated with industrial progress—as history has taught us—and we must look to mitigate the negative effects. The “we” in this are businesses, workers and their unions, and the Government. What, specifically, is being proposed to mitigate the negative effects of automation? For example, what engagement have the Government had with businesses regarding the challenges of automation, and in particular the way employers manage the transition to automation that supports their needs to compete, but recognises their responsibilities as employers?

The Government’s industrial strategy, published last year, stated that the Government will introduce a national retraining scheme in England by the end of this Parliament, with a high-level advisory group—the National Retraining Partnership—bringing together the Government, businesses and workers, through the Confederation of British Industry and the Trades Union Congress, to set the scheme’s strategic direction and oversee implementation. Given that the first meeting was only on 5 March, what progress has been made to date on this and how does the Minister envision this helping my constituents in Shaw and others affected across Greater Manchester? In addition, what support will be offered to agency workers, such as those at Blue Arrow, who will feel the impact in my constituency; and will it be worker led rather than employer led?

The sum of £40 million was announced in the spring statement to test innovative approaches to help adults upskill and reskill. What progress has been made on these pilots, and will the Minister consider a pilot in the Shaw and Greater Manchester areas? Information from Oldham Council indicates that Oldham’s labour market expects growth in health and social care, and business and financial services, which could be ideal for a national retraining scheme pilot, supporting career changers. I hope that the Minister will say something about that in his remarks.

I gently say to the Minister that, given that the Government cut £1.15 billion from the adult skills budget between 2010 and 2015, and the adult education budget is 40% less than it was 10 years ago, the money allocated to the national retraining scheme is a drop in the ocean. But whatever funding is available, I want to make sure that Oldham, and Greater Manchester as a whole, gets a fair crack at it.

Our vision for this country must be for a high-skill, high-pay, knowledge-driven economy, and the Government must recognise the investment needed to achieve that. Focusing, as much of the industrial strategy does, on a few elite sectors will not deliver on the ambition to transform Britain’s economy. Will the Minister therefore look at setting up sector councils, modelled on the highly successful Automotive Skills, for every strategically important industry, bringing together Government, business, trade associations, research councils and so on, so that they can collaboratively plan and take action for the future security and growth of each sector, including small and medium enterprises?

As people increasingly transition between jobs, training and re-training, we need to have a responsive, supportive and enabling social security system. This does not exist at the moment. The hostile environment in the Home Office is replicated in the Department for Work and Pensions. This has to stop. I would be grateful for the Minister’s reassurance that he will do everything in his power to work with the Secretary of State for Work and Pensions to ensure that my constituents are afforded the dignity and respect that they deserve, and that he will report back to the House on the joint work that he will undertake with the Secretary of State to make our social security system fit for purpose for everyone affected by this new world of work.

It is clear that as well as affecting nearly 2,000 workers in Greater Manchester, Shop Direct’s proposal to relocate and move towards greater automation in its distribution facilities is indicative of profound changes in the labour market and the nature of work. Together with colleagues, I will continue to do all I can to support the 1,992 people affected by this decision and to maintain jobs on the sites affected. There are serious questions for Ministers about the impact of automation on the labour market, the increasingly insecure nature of work and our inadequate social security system. All those issues need to be addressed. I look forward to the Minister’s response to the many points I have raised.

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[Mr Gyimah]

These are all very important points, but as I said, businesses make commercial decisions driven by their own commercial interest. The Government’s responsibility is to support the employees, find new work and to support the local community as it transitions through this period.

Let me come to some of the other points made by the hon. Member for Oldham East and Saddleworth. The broader question of automation was raised. Of course, we recognise the workplace challenges as well as the potential opportunities. Matthew Taylor stated in his review of modern working practices that history has shown that technological advancements and the automation of individual tasks can lead to job creation. In our response to his review, we set out our Good Work plan to ensure that the labour market is resilient enough to respond to the changes that automation may bring.

[Debbie Abrahams]

My specific point about Shop Direct is that we need BEIS support—Government support—to ensure that, if it does ultimately leave the sites in Greater Manchester, alternative employment will be brought in. Just saying that it is the responsibility of the employees to reskill and retrain is not good enough.

[Mr Gyimah]

I certainly have not said that it is the responsibility of the employees to reskill and retrain; I have said that the Jobcentre Plus rapid response service will be working directly with them, and BEIS will work with the taskforce at the local level as far as the transition is concerned. A number of important conversations will have to take place on this over the next few years, but I can give the hon. Lady a categorical assurance that Ministers, as well as BEIS employees, will work closely with her and her colleagues to make this transition as smooth as possible for the employees and the local community.

Question put and agreed to.